SEC Poised to Modify 'No Admit, No Deny' Policy in Settlements

Observers believe such a change would result in potentially far-reaching consequences for companies that fall under the purview of the SEC, including private, for-profit hospitals, their directors, officers, and employees.

G. Derek Andreson

At The Wall Street Journal CFO Network's Annual Meeting in June, Securities and Exchange Commission Chair Mary Jo White said she would push to modify the commission's "no-admit no-deny" policy and require more admissions of guilt from defendants when settling enforcement cases.

White's proposal represents a pronounced departure from the SEC's longstanding no-admit no-deny policy under which defendants settle cases without admitting or denying wrongdoing. Currently, the SEC requires such admissions in a narrow array of cases where defendants admit certain facts as part of a guilty plea or other criminal or regulatory agreement.

White told the CFOs that the no-admit, no-deny policy will still be used in the "majority" of cases and that "having 'no-admit, no-deny' settlement protocols in your arsenal as a civil enforcement agency [is] critically important to maintain," according to a Reuters report.

The change comes after recent criticism of the policy from two federal judges and U.S. Sen. Elizabeth Warren (D-MA). Observers believe such a change would result in potentially far-reaching consequences for companies that fall under the purview of the SEC, including private, for-profit hospitals, their directors, officers, and employees.

G. Derek Andreson, a partner at the law firm of Pillsbury Winthrop Shaw Pittman LLP, and an expert on SEC enforcement matters, spoke with HealthLeaders Media about the potential effects of such an SEC policy shift.